Trial Balance Worksheet
A trial balance worksheet is an accounting tool used to list and compare total debits and credits for all accounts to ensure that they balance, i.e., the total debits equal the total credits. It’s essentially an extended version of a trial balance.
The worksheet can also facilitate other end-of-period accounting procedures, such as adjusting entries and preparation of financial statements. It often has multiple columns to accommodate adjustments and to show the impact of these adjustments on account balances.
Typical Columns in a Trial Balance Worksheet:
- Account Names: Lists all the ledger account titles.
- Unadjusted Trial Balance: Contains the balances of all ledger accounts before making any year-end adjusting entries. It’s essentially the initial trial balance.
- Adjustments: Contains columns for debits and credits that arise from adjusting entries. These adjustments could be for items like accrued expenses, accrued revenues, prepaid expenses, or unearned revenues.
- Adjusted Trial Balance: Shows the balances of all accounts after considering the adjusting entries. It’s the basis for preparing financial statements.
- (Optional) Income Statement and Balance Sheet Columns: Some trial balance worksheets will have additional columns to facilitate the preparation of the financial statements. Balances from the adjusted trial balance are transferred to these columns based on whether they pertain to the income statement (like revenues and expenses) or the balance sheet (like assets, liabilities, and equity).
How a Trial Balance Worksheet Works:
- Start with the unadjusted trial balance. Transfer all account names and their corresponding balances to the worksheet.
- Record adjusting entries in the adjustments columns.
- Determine the adjusted balances by adding or subtracting the adjustments from the unadjusted trial balance. Record these in the adjusted trial balance columns.
- ( If applicable) Transfer the adjusted balances to the appropriate income statement or balance sheet columns.
- Use the figures from the worksheet to prepare the financial statements.
Example of a Trial Balance Worksheet
Let’s create a simplified example of a trial balance worksheet for a fictional company named “Bella’s Boutique” at the end of its first year of operation.
Bella’s Boutique Trial Balance Worksheet
| Account Name | Unadjusted Trial Balance (Dr) | Unadjusted Trial Balance (Cr) | Adjustments (Dr) | Adjustments (Cr) | Adjusted Trial Balance (Dr) | Adjusted Trial Balance (Cr) |
|---|---|---|---|---|---|---|
| Cash | 25,000 | 25,000 | ||||
| Accounts Receivable | 5,000 | 5,000 | ||||
| Supplies | 2,000 | 500 | 1,500 | |||
| Equipment | 20,000 | 20,000 | ||||
| Accounts Payable | 4,000 | 500 | 3,500 | |||
| Bella’s Capital | 40,000 | 40,000 | ||||
| Sales Revenue | 30,000 | 1,000 | 31,000 | |||
| Wages Expense | 10,000 | 1,000 | 11,000 | |||
| Rent Expense | 8,000 | 500 | 8,500 | |||
| Totals | 70,000 | 74,000 | 2,000 | 1,500 | 71,000 | 74,500 |
Adjustments Explained:
- Supplies: After counting the remaining supplies at year-end, Bella determined that $500 worth of supplies were used up.
- Accounts Payable : Bella discovered she had over-accounted a liability by $500.
- Sales Revenue : Bella recorded an additional sale of $1,000 that was missed earlier.
- Wages Expense: Bella needs to account for $1,000 in wages that will be paid in the next month but pertain to this year.
- Rent Expense : Bella prepaid her rent, and $500 of that prepayment applies to the next year.
Interpretation:
- After adjustments, the adjusted trial balances for debits and credits still don’t match. This suggests there is still an error.
- In reality, the accountant would go back through the books to determine where the error occurred and correct it so that the debits and credits of the adjusted trial balance match.
Remember, this is a very simplified version of what a business might encounter. Real-world trial balance worksheets may have many more accounts and adjustment entries. The core idea is to begin with the initial (unadjusted) balances, make necessary year-end adjustments, and arrive at the adjusted amounts that will be used to create financial statements.
